Means-Tested Welfare Spending: Past and Future Growth

The U.S. welfare system may be defined as the total set of
government programs-federal and state-that are designed explicitly
to assist poor and low-income Americans.

Nearly all welfare programs are individually
means-tested.1
Means-tested programs restrict eligibility for benefits to persons
with non-welfare income below a certain level. Individuals with
non-welfare income above a specified cutoff level may not receive
aid. Thus, Food Stamp and Temporary Assistance to Needy Families
(TANF) benefits are means-tested and constitute welfare, but Social
Security benefits are not.

The current welfare system is highly complex, involving six
departments: HHS, Agriculture, HUD, Labor, Treasury, and Education.
It is not unusual for a single poor family to receive benefits from
four different departments through as many as six or seven
overlapping programs. For example, a family might simultaneously
receive benefits from: TANF, Medicaid, Food Stamps, Public Housing,
WIC, Head Start, and the Social Service Block Grant. It is
therefore important to examine welfare holistically. Examination of
a single program or department in isolation is invariably
misleading.

The Cost of the welfare System

The federal government currently runs over 70 major
interrelated, means-tested welfare programs, through the six
departments mentioned above. State governments contribute to many
federal programs, and some states operate small independent
programs as well. Most state welfare spending is actually required
by the federal government and thus should considered as an adjunct
to the federal system. Therefore, to understand the size of the
welfare state, federal and state spending must be considered
together. (A list of individual welfare programs is provided in
Appendix B.)

Total federal and state spending on welfare programs was $434
billion in FY 2000. Of that total, $313 billion (72 percent) came
from federal funding and $121 billion (28 percent) came from state
or local funds. (See Chart 1.)

welfare spending is so large it is difficult to comprehend. On
average, the annual cost of the welfare system amounts to around
$5,600 in taxes from each household that paid federal income tax in
2000. Adjusting for inflation, the amount taxpayers now spend on
welfare each year is greater than the value of the entire U.S.
Gross National Product at the beginning of the 20th
century.

The combined federal and state welfare system now includes cash
aid, food, medical aid, housing aid, energy aid, jobs and training,
targeted and means-tested education, social services, and urban and
community development programs.2 As Table One shows, in
FY2000:

Medical assistance to low income persons cost $222 billion or
51 percent of total welfare spending.

Cash, food and housing aid together cost $167 billion or 38
percent of the total.

Social Services, training, targeted education, and community
development aid cost around $47 billion or 11 percent of the
total.

Roughly half of total welfare spending goes to families with
children, most of which are single parent households. The other
half goes largely to the elderly and to disabled adults.

The Growth of welfare Spending

As Chart 2 shows,
throughout most of U.S. history welfare spending remained low. In
1965 when Lyndon Johnson launched the War on poverty, aggregate
welfare spending was only $8.9 billion. (This would amount to
around $42 billion if adjusted for inflation into today's
dollars.)

Since the beginning of the War on poverty in 1965 welfare
spending has exploded. The rapid growth in welfare costs has
continued to the present.

In constant dollars, welfare
spending has risen every year but four since the beginning of the
War on poverty in 1965;

As a nation, we now spend ten
times as much on welfare, after adjusting for inflation, as was
spent when Lyndon Johnson launched the War on Poverty. We spend
twice as much as when Ronald Reagan was first elected.

Cash, food, housing, and energy
aid alone are nearly seven times greater today than in 1965, after
adjusting for inflation;

As a percentage of Gross Domestic Product, welfare spending has
grown from 1.2 percent in 1965 to 4.4 percent today.

Some might think that this spending growth merely reflects an
increase in the U.S. population. But, adjusting for inflation,
welfare spending per person is now at the highest level in U.S.
history. In constant dollars, it is seven times higher than at the
start of the War on poverty in the 1960's.

Total Cost of the War on poverty

The financial cost of the War on poverty has been enormous.
Between 1965 and 2000 welfare spending cost taxpayers $8.29
trillion (in constant 2000 dollars). By contrast, the cost to the
United States of fighting World War II was $3.3 trillion (expressed
in 2000 dollars). Thus, the cost of the War on poverty has been
more than twice the price tag for defeating Germany and Japan in
World War II, after adjusting for inflation.

welfare Spending in the Nineties

welfare spending has continued its rapid growth during the last
decade. In nominal dollars (unadjusted for inflation), combined
federal and state welfare spending doubled over the last ten years.
It rose from $215 billion in 1990 to $434 billion in 2000. The
average rate of increase was 7.5% per year. Part of this spending
increase was due to inflation. But, even after adjusting for
inflation, total welfare spending grew by 61 percent over the
decade.

As Chart 2 shows
medical spending (mainly in the Medicaid program) grew most rapidly
during the 1990's, but welfare cash, food, and housing spending
grew as well. Adjusting for inflation, cash, food and housing
assistance is 37 percent higher today than in 1990. However, the
growth in these programs has slowed since 1995, increasing no
faster than the rate of inflation. This recent slowdown in spending
is, in part, the effect of welfare reforms enacted in
mid-nineties.

Future welfare Spending Growth

President George W. Bush's recent budget blueprint does not
contain sufficient detail to permit projections of welfare spending
program by program.3
However, the budget blueprint does provide spending projections for
two major budget functions which are integral to the welfare
system. These budget codes are Income Security (Function Code 600)
and Health (Function Code 500). Income Security contains cash
welfare, Food Stamps and other food aid, and housing aid.4 Health (Code 500) contains
Medicaid and a few smaller means-tested health programs. Between
them, these two budget categories contain about 90 percent of the
federal welfare system as it is described in this testimony. (Note:
neither category includes Social Security or Medicare.)

President Bush's budget plan allows for spending in Income
Security and Health to grow as rapidly or more rapidly than did
former President Clinton's FY 20001 budget request. Income Security
(Code 600) is scheduled to grow by 24 percent over the next five
years. Health (Code 500) is scheduled to grow by 62 percent over
five years.5

Based on these figures it seems certain that means-tested
welfare spending will grow as rapidly under President Bush's first
budget request as under Clinton's last. Projected welfare spending
figures from Clinton's last budget (FY2001) are provided in
Appendix A.6 These
figures show a rapid of growth in welfare spending. (See Chart 3.)7

Total federal welfare spending is
projected to grow from $315 billion in 2000 to $412 billion in
2005: an increase of 31 percent. The annual rate of spending
increase is projected at 5.5 percent.

Federal spending on cash, food,
and housing aid is projected to grow from $141 billion to $174
billion: an increase of 23 percent. The annual rate of spending
increase would be 4.3 percent, nearly twice the anticipated rate of
inflation.

Together, federal and state welfare spending would rise from
around $434 billion in 2000 to $573 billion in 2005.

Again, although we do not yet have program by program spending
projections from the Bush administration, the broad budget function
figures we do have allow for the same rate of growth in cash, food,
and housing as Clinton's plan. Moreover, the Bush figures would
permit more rapid growth in health spending. Thus, clearly,
President Bush's plan does not require cuts in welfare spending or
even a slowdown in the rate of spending growth.

welfare and Defense

The rapid projected rate of growth of future welfare spending
can be illustrated by comparing welfare to defense. The President
has promised to make Defense spending a priority. Under his budget
plan, nominal Defense outlays would increase for the first time in
a half decade. Defense spending would rise by 17 percent over five
years from $299 billion in FY2000 to $347 billion in FY2005. During
the same period, however, welfare spending is scheduled to rise by
31 percent. As Chart 4 shows, the
gap between welfare and Defense spending will actually broaden
during this period.

The Effects of welfare Reform

In 1996, Congress enacted a limited welfare reform; The Aid to
Families with Dependent Children (AFDC) program was replaced by the
Temporary Assistance to Needy Families (TANF) program. Critically,
a certain portion of AFDC/TANF recipients were required to engage
in job search, on the job training, community service work, or
other constructive behaviors as a condition for receiving aid. The
effects of this reform have been dramatic.

While critics predicted the reform would increase child poverty,
the exact opposite has occurred. Once mothers were required to work
or undertake constructive activities as a condition of receiving
aid they left welfare rapidly. Employment of single mothers
increased substantially and the child poverty rate fell sharply
from 20.8 percent in 1995 to 16.3 percent in 2000. The black child
poverty rate and the poverty rate for children living with single
mothers are both at the lowest points in U.S. history.

In the welfare reform of 1996 all sides came out as winners:
taxpayers, society and children. By requiring welfare mothers to
work as a condition of receiving aid, welfare costs and dependence
were reduced. Employment increased and poverty fell. Moreover,
research shows that prolonged welfare dependence itself is harmful
to children; reducing welfare use and having working adults in the
home to serve as role models for children will improve those
children's prospects for success later in life.

The workfare principles of the 1996 reform should be intensified
and expanded. Work requirements in TANF should be strengthened.
Similar work requirements should be established in the Food Stamp
and public housing programs. Finally, because the reform has
clearly succeeded in cutting welfare use, TANF outlays should be
reduced by 10 percent in future years.

welfare Spending and the Collapse of
marriage

As noted previously, about half of all means-tested welfare
spending is devoted to families with children. Of this spending on
children, nearly all goes to single parent families. Chart 6 shows the
percent of aid to children in major welfare programs which flows to
single parent families. The single parent share is generally well
above 80 percent.

Clearly, the modern welfare state, as it relates to children is
largely a support system for single parenthood. Indeed, without the
collapse of marriage which began in the mid-1960's, the part of the
welfare state serving children would be almost non-existent.

The growth of single parent families, fostered by welfare, has
had a devastating effect on our society. Today nearly one third of
all American children are born outside marriage. That's one
out-of-wedlock birth every 35 seconds. Of those born inside
marriage, a great many will experience their parents' divorce
before they reach age 18. Over half of children will spend all or
part of their childhood in never-formed or broken families.

This collapse of marriage is the principal cause of child
poverty and a host of other social ills. A child raised by a
never-married mother is seven times more likely to live in poverty
than a child raised by his biological parents in an intact
marriage. Overall, some 80 percent of child poverty in the U.S.
occurs to children from broken or never-formed families. In
addition, children in these families are more likely to become
involved in crime, to have emotional and behavioral problems, to be
physically abused, to fail in school, to abuse drugs, and to end up
on welfare as adults.

Since the collapse of marriage is the predominant cause of
child-related welfare spending, it follows that it will be very
difficult to shrink the future welfare state unless marriage is
revitalized. Policies to reduce illegitimacy, reduce divorce and
expand and strengthen marriage will prove to be by far the most
effective means to:

reduce dependence;

cut future welfare costs;

eradicate child poverty; and,

improve child well-being.

Tragically, current government policy deliberately ignores or
neglects marriage. For every $1,000 which government currently
spends subsidizing single parents, only one dollar is spent
attempting to reduce illegitimacy and strengthen marriage.

Fortunately, President's Bush's budget plan does propose a new
program to "promote responsible fatherhood." This proposed program
could become the seedbed for a broad array of new initiatives to
strengthen marriage. Still, the money requested is pitifully small:
only $64 million per year. This amounts to roughly one penny for
each one hundred dollars in projected welfare spending. The budget
allocation to the new fatherhood program in FY 2002 should be
increased fivefold with the funds diverted from TANF outlays.
Beyond FY 2000 some 5 to 10 percent of federal TANF funding should
be devoted to pro-marriage activities.

Conclusion

When Lyndon Johnson launched the War on poverty he did not
envision an endless growth of welfare spending and dependence. If
Johnson returned today to see the size of the current welfare state
he would be deeply shocked.

President Johnson's focus was on giving the poor a "hand up" not
a "hand out." In his first speech announcing the War on poverty,
Johnson stated, "the war on poverty is not a struggle simply to
support people, to make them dependent on the generosity of
others." Instead, the plan was to give the poor the behavioral
skills and values necessary to escape from both poverty and
dependence. Johnson sought to address the "the causes, not just the
consequences of poverty."

Today, President Johnson's original vision has been all but
abandoned. We now have a clear expectation that the number of
persons receiving welfare aid should be enlarged each year, and
that the benefits they receive should be expanded. This expectation
is clearly reflected in the future spending projections in Appendix
A. Any failure to increase the numbers of individuals dependent on
government and the benefits they get is regarded as mean
spirited.

Yet the expansion of the conventional welfare system is
destructive. More than twenty years ago, then President Jimmy
Carter stated, "the welfare system is anti-work, anti-family,
inequitable in its treatment of the poor and wasteful of the
taxpayers' dollars." President Carter was correct, yet today little
has changed except that the welfare system has become vastly larger
and more expensive.

This expansion of welfare spending has harmed rather than helped
the poor. Instead of serving as a short-term ladder to help
individuals climb out of the culture of poverty, welfare has
broadened and deepened the culture of self-destruction and trapped
untold millions in it.

Rather than increasing conventional welfare spending year after
year, we should change the foundations of the welfare system.
Policy makers should embrace three basic goals.

We should seek to limit the future
growth of aggregate means-tested welfare spending to the rate of
inflation or slower.

We should require welfare
recipients to perform community service work as a condition of
receiving aid along the lines of the TANF program operating in
Wisconsin.

We should support programs which foster and sustain marriage
rather than subsidizing single parenthood. In addition, we should
reduce the anti-marriage penalties implicit in the welfare
system.

These three goals are synergistic. They will operate in harmony
and reinforce each other. In the long run, it will be difficult to
control welfare spending merely by cutting funding. Rather, if we
change the behaviors of potential recipients we will reduce the
need for future aid. As the need for aid diminishes, spending
growth will slow and then decline, and the well being of the poor
and society as a whole will rise.

The U.S. welfare system may be defined as the total set of
government programs-federal and state-that are designed explicitly
to assist poor and low-income Americans.

Nearly all welfare programs are individually
means-tested.1
Means-tested programs restrict eligibility for benefits to persons
with non-welfare income below a certain level. Individuals with
non-welfare income above a specified cutoff level may not receive
aid. Thus, Food Stamp and Temporary Assistance to Needy Families
(TANF) benefits are means-tested and constitute welfare, but Social
Security benefits are not.

The current welfare system is highly complex, involving six
departments: HHS, Agriculture, HUD, Labor, Treasury, and Education.
It is not unusual for a single poor family to receive benefits from
four different departments through as many as six or seven
overlapping programs. For example, a family might simultaneously
receive benefits from: TANF, Medicaid, Food Stamps, Public Housing,
WIC, Head Start, and the Social Service Block Grant. It is
therefore important to examine welfare holistically. Examination of
a single program or department in isolation is invariably
misleading.

The Cost of the welfare System

The federal government currently runs over 70 major
interrelated, means-tested welfare programs, through the six
departments mentioned above. State governments contribute to many
federal programs, and some states operate small independent
programs as well. Most state welfare spending is actually required
by the federal government and thus should considered as an adjunct
to the federal system. Therefore, to understand the size of the
welfare state, federal and state spending must be considered
together. (A list of individual welfare programs is provided in
Appendix B.)

Total federal and state spending on welfare programs was $434
billion in FY 2000. Of that total, $313 billion (72 percent) came
from federal funding and $121 billion (28 percent) came from state
or local funds. (See Chart 1.)

welfare spending is so large it is difficult to comprehend. On
average, the annual cost of the welfare system amounts to around
$5,600 in taxes from each household that paid federal income tax in
2000. Adjusting for inflation, the amount taxpayers now spend on
welfare each year is greater than the value of the entire U.S.
Gross National Product at the beginning of the 20th
century.

The combined federal and state welfare system now includes cash
aid, food, medical aid, housing aid, energy aid, jobs and training,
targeted and means-tested education, social services, and urban and
community development programs.2 As Table One shows, in
FY2000:

Medical assistance to low income persons cost $222 billion or
51 percent of total welfare spending.

Cash, food and housing aid together cost $167 billion or 38
percent of the total.

Social Services, training, targeted education, and community
development aid cost around $47 billion or 11 percent of the
total.

Roughly half of total welfare spending goes to families with
children, most of which are single parent households. The other
half goes largely to the elderly and to disabled adults.

The Growth of welfare Spending

As Chart 2 shows,
throughout most of U.S. history welfare spending remained low. In
1965 when Lyndon Johnson launched the War on poverty, aggregate
welfare spending was only $8.9 billion. (This would amount to
around $42 billion if adjusted for inflation into today's
dollars.)

Since the beginning of the War on poverty in 1965 welfare
spending has exploded. The rapid growth in welfare costs has
continued to the present.

In constant dollars, welfare
spending has risen every year but four since the beginning of the
War on poverty in 1965;

As a nation, we now spend ten
times as much on welfare, after adjusting for inflation, as was
spent when Lyndon Johnson launched the War on Poverty. We spend
twice as much as when Ronald Reagan was first elected.

Cash, food, housing, and energy
aid alone are nearly seven times greater today than in 1965, after
adjusting for inflation;

As a percentage of Gross Domestic Product, welfare spending has
grown from 1.2 percent in 1965 to 4.4 percent today.

Some might think that this spending growth merely reflects an
increase in the U.S. population. But, adjusting for inflation,
welfare spending per person is now at the highest level in U.S.
history. In constant dollars, it is seven times higher than at the
start of the War on poverty in the 1960's.

Total Cost of the War on poverty

The financial cost of the War on poverty has been enormous.
Between 1965 and 2000 welfare spending cost taxpayers $8.29
trillion (in constant 2000 dollars). By contrast, the cost to the
United States of fighting World War II was $3.3 trillion (expressed
in 2000 dollars). Thus, the cost of the War on poverty has been
more than twice the price tag for defeating Germany and Japan in
World War II, after adjusting for inflation.

welfare Spending in the Nineties

welfare spending has continued its rapid growth during the last
decade. In nominal dollars (unadjusted for inflation), combined
federal and state welfare spending doubled over the last ten years.
It rose from $215 billion in 1990 to $434 billion in 2000. The
average rate of increase was 7.5% per year. Part of this spending
increase was due to inflation. But, even after adjusting for
inflation, total welfare spending grew by 61 percent over the
decade.

As Chart 2 shows
medical spending (mainly in the Medicaid program) grew most rapidly
during the 1990's, but welfare cash, food, and housing spending
grew as well. Adjusting for inflation, cash, food and housing
assistance is 37 percent higher today than in 1990. However, the
growth in these programs has slowed since 1995, increasing no
faster than the rate of inflation. This recent slowdown in spending
is, in part, the effect of welfare reforms enacted in
mid-nineties.

Future welfare Spending Growth

President George W. Bush's recent budget blueprint does not
contain sufficient detail to permit projections of welfare spending
program by program.3
However, the budget blueprint does provide spending projections for
two major budget functions which are integral to the welfare
system. These budget codes are Income Security (Function Code 600)
and Health (Function Code 500). Income Security contains cash
welfare, Food Stamps and other food aid, and housing aid.4 Health (Code 500) contains
Medicaid and a few smaller means-tested health programs. Between
them, these two budget categories contain about 90 percent of the
federal welfare system as it is described in this testimony. (Note:
neither category includes Social Security or Medicare.)

President Bush's budget plan allows for spending in Income
Security and Health to grow as rapidly or more rapidly than did
former President Clinton's FY 20001 budget request. Income Security
(Code 600) is scheduled to grow by 24 percent over the next five
years. Health (Code 500) is scheduled to grow by 62 percent over
five years.5

Based on these figures it seems certain that means-tested
welfare spending will grow as rapidly under President Bush's first
budget request as under Clinton's last. Projected welfare spending
figures from Clinton's last budget (FY2001) are provided in
Appendix A.6 These
figures show a rapid of growth in welfare spending. (See Chart 3.)7

Total federal welfare spending is
projected to grow from $315 billion in 2000 to $412 billion in
2005: an increase of 31 percent. The annual rate of spending
increase is projected at 5.5 percent.

Federal spending on cash, food,
and housing aid is projected to grow from $141 billion to $174
billion: an increase of 23 percent. The annual rate of spending
increase would be 4.3 percent, nearly twice the anticipated rate of
inflation.

Together, federal and state welfare spending would rise from
around $434 billion in 2000 to $573 billion in 2005.

Again, although we do not yet have program by program spending
projections from the Bush administration, the broad budget function
figures we do have allow for the same rate of growth in cash, food,
and housing as Clinton's plan. Moreover, the Bush figures would
permit more rapid growth in health spending. Thus, clearly,
President Bush's plan does not require cuts in welfare spending or
even a slowdown in the rate of spending growth.

welfare and Defense

The rapid projected rate of growth of future welfare spending
can be illustrated by comparing welfare to defense. The President
has promised to make Defense spending a priority. Under his budget
plan, nominal Defense outlays would increase for the first time in
a half decade. Defense spending would rise by 17 percent over five
years from $299 billion in FY2000 to $347 billion in FY2005. During
the same period, however, welfare spending is scheduled to rise by
31 percent. As Chart 4 shows, the
gap between welfare and Defense spending will actually broaden
during this period.

The Effects of welfare Reform

In 1996, Congress enacted a limited welfare reform; The Aid to
Families with Dependent Children (AFDC) program was replaced by the
Temporary Assistance to Needy Families (TANF) program. Critically,
a certain portion of AFDC/TANF recipients were required to engage
in job search, on the job training, community service work, or
other constructive behaviors as a condition for receiving aid. The
effects of this reform have been dramatic.

While critics predicted the reform would increase child poverty,
the exact opposite has occurred. Once mothers were required to work
or undertake constructive activities as a condition of receiving
aid they left welfare rapidly. Employment of single mothers
increased substantially and the child poverty rate fell sharply
from 20.8 percent in 1995 to 16.3 percent in 2000. The black child
poverty rate and the poverty rate for children living with single
mothers are both at the lowest points in U.S. history.

In the welfare reform of 1996 all sides came out as winners:
taxpayers, society and children. By requiring welfare mothers to
work as a condition of receiving aid, welfare costs and dependence
were reduced. Employment increased and poverty fell. Moreover,
research shows that prolonged welfare dependence itself is harmful
to children; reducing welfare use and having working adults in the
home to serve as role models for children will improve those
children's prospects for success later in life.

The workfare principles of the 1996 reform should be intensified
and expanded. Work requirements in TANF should be strengthened.
Similar work requirements should be established in the Food Stamp
and public housing programs. Finally, because the reform has
clearly succeeded in cutting welfare use, TANF outlays should be
reduced by 10 percent in future years.

welfare Spending and the Collapse of
marriage

As noted previously, about half of all means-tested welfare
spending is devoted to families with children. Of this spending on
children, nearly all goes to single parent families. Chart 6 shows the
percent of aid to children in major welfare programs which flows to
single parent families. The single parent share is generally well
above 80 percent.

Clearly, the modern welfare state, as it relates to children is
largely a support system for single parenthood. Indeed, without the
collapse of marriage which began in the mid-1960's, the part of the
welfare state serving children would be almost non-existent.

The growth of single parent families, fostered by welfare, has
had a devastating effect on our society. Today nearly one third of
all American children are born outside marriage. That's one
out-of-wedlock birth every 35 seconds. Of those born inside
marriage, a great many will experience their parents' divorce
before they reach age 18. Over half of children will spend all or
part of their childhood in never-formed or broken families.

This collapse of marriage is the principal cause of child
poverty and a host of other social ills. A child raised by a
never-married mother is seven times more likely to live in poverty
than a child raised by his biological parents in an intact
marriage. Overall, some 80 percent of child poverty in the U.S.
occurs to children from broken or never-formed families. In
addition, children in these families are more likely to become
involved in crime, to have emotional and behavioral problems, to be
physically abused, to fail in school, to abuse drugs, and to end up
on welfare as adults.

Since the collapse of marriage is the predominant cause of
child-related welfare spending, it follows that it will be very
difficult to shrink the future welfare state unless marriage is
revitalized. Policies to reduce illegitimacy, reduce divorce and
expand and strengthen marriage will prove to be by far the most
effective means to:

reduce dependence;

cut future welfare costs;

eradicate child poverty; and,

improve child well-being.

Tragically, current government policy deliberately ignores or
neglects marriage. For every $1,000 which government currently
spends subsidizing single parents, only one dollar is spent
attempting to reduce illegitimacy and strengthen marriage.

Fortunately, President's Bush's budget plan does propose a new
program to "promote responsible fatherhood." This proposed program
could become the seedbed for a broad array of new initiatives to
strengthen marriage. Still, the money requested is pitifully small:
only $64 million per year. This amounts to roughly one penny for
each one hundred dollars in projected welfare spending. The budget
allocation to the new fatherhood program in FY 2002 should be
increased fivefold with the funds diverted from TANF outlays.
Beyond FY 2000 some 5 to 10 percent of federal TANF funding should
be devoted to pro-marriage activities.

Conclusion

When Lyndon Johnson launched the War on poverty he did not
envision an endless growth of welfare spending and dependence. If
Johnson returned today to see the size of the current welfare state
he would be deeply shocked.

President Johnson's focus was on giving the poor a "hand up" not
a "hand out." In his first speech announcing the War on poverty,
Johnson stated, "the war on poverty is not a struggle simply to
support people, to make them dependent on the generosity of
others." Instead, the plan was to give the poor the behavioral
skills and values necessary to escape from both poverty and
dependence. Johnson sought to address the "the causes, not just the
consequences of poverty."

Today, President Johnson's original vision has been all but
abandoned. We now have a clear expectation that the number of
persons receiving welfare aid should be enlarged each year, and
that the benefits they receive should be expanded. This expectation
is clearly reflected in the future spending projections in Appendix
A. Any failure to increase the numbers of individuals dependent on
government and the benefits they get is regarded as mean
spirited.

Yet the expansion of the conventional welfare system is
destructive. More than twenty years ago, then President Jimmy
Carter stated, "the welfare system is anti-work, anti-family,
inequitable in its treatment of the poor and wasteful of the
taxpayers' dollars." President Carter was correct, yet today little
has changed except that the welfare system has become vastly larger
and more expensive.

This expansion of welfare spending has harmed rather than helped
the poor. Instead of serving as a short-term ladder to help
individuals climb out of the culture of poverty, welfare has
broadened and deepened the culture of self-destruction and trapped
untold millions in it.

Rather than increasing conventional welfare spending year after
year, we should change the foundations of the welfare system.
Policy makers should embrace three basic goals.

We should seek to limit the future
growth of aggregate means-tested welfare spending to the rate of
inflation or slower.

We should require welfare
recipients to perform community service work as a condition of
receiving aid along the lines of the TANF program operating in
Wisconsin.

We should support programs which foster and sustain marriage
rather than subsidizing single parenthood. In addition, we should
reduce the anti-marriage penalties implicit in the welfare
system.

These three goals are synergistic. They will operate in harmony
and reinforce each other. In the long run, it will be difficult to
control welfare spending merely by cutting funding. Rather, if we
change the behaviors of potential recipients we will reduce the
need for future aid. As the need for aid diminishes, spending
growth will slow and then decline, and the well being of the poor
and society as a whole will rise.

1. A very small
number of the programs listed in Appendix B are targeted to low
income communities rather than low income individuals. While such programs are not
formally means-tested, they should be considered part of the
overall welfare system. Only a small fraction of
aggregate welfare spending is provided through such programs.

2.
Appendix B provides a list of the major federal and state welfare
programs covered in this testimony.

3. The White
House, A Blueprint for New
Beginnings: A Responsible Budget for America's Priorities,
(Washington, D.C.: U.S. Government Printing Office, 2001)

4. Income
Security (function code 600) contains some
non-welfare expenditures, specifically outlays for retired federal
employees and other retirement spending. However, the rate of growth
of this retirement spending changes little from one year to the
next, therefore once the code 600 outlay totals are known one can
predict the means-tested component with reasonable accuracy.

6. Projected
outlay figures taken from Office of Management and Budget, Budget of the United States
Government: Fiscal Year 2001, (Washington, D.C.: U.S.
Government Printing Office, 2000). Table 32-2, pp.352-364.

7. The outlay
figures in Appendix A are less detailed than the past spending
figures used in Table 1. This accounts for small
discrepancies between the FY2000 figures in Table 1and Appendix
A. These minor
differences do not appreciably affect the overall analysis.

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